Caseflicks

Supreme Court of the United States • 1985

Marek v. Chesny

473 U.S. 1 | 105 S. Ct. 3012 | 87 L. Ed. 2d 1 | 1985 U.S. LEXIS 81 | 1 Fed. R. Serv. 3d 1297 | 53 U.S.L.W. 4903

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Takeaway

In short, this case holds that a valid Rule 68 offer may be lump-sum, and that § 1988 attorney's fees count as Rule 68 costs—so a civil-rights plaintiff who rejects a better offer cannot recover post-offer fees.

Background

Three police officers responding to a domestic-disturbance call shot and killed Chesny's adult son. Chesny sued the officers under 42 U.S.C. § 1983 and Illinois tort law, both individually and as administrator of his son's estate.

Before trial, the officers made a timely Federal Rule of Civil Procedure 68 offer to settle for $100,000, expressly including accrued costs and attorney's fees. Chesny rejected it. At trial, he recovered $5,000 on a state wrongful-death claim, $52,000 on his § 1983 claim, and $3,000 in punitive damages—a total of $60,000.

Chesny then sought $171,692.47 in costs, including attorney's fees. The District Court held that Rule 68 barred recovery of costs and fees incurred after the $100,000 offer because the judgment was less favorable than the offer. The parties agreed that $32,000 represented allowable pre-offer costs and fees. The Seventh Circuit reversed, reasoning that applying Rule 68 to post-offer § 1988 fees would undermine Congress's purpose of encouraging civil-rights litigation. The Supreme Court reversed the Seventh Circuit.

Issues

Issue #1

Whether a Rule 68 offer is invalid unless it separately states the amount offered for the substantive claim and the amount offered for accrued costs and attorney's fees.

Holding

No. Rule 68 permits a valid lump-sum offer that includes both substantive relief and accrued costs; the offer need not itemize those components.

Reasoning

Rule 68 requires an offer that permits judgment against the defendant for the relief sought and for costs then accrued. Its central concern is whether an accepted offer results in a judgment covering both damages and accrued costs, not whether the offer separately identifies each component.

An offer that states costs are included, specifies a sum for costs, or says nothing about costs can satisfy the Rule, so long as it does not expressly or implicitly exclude costs. If an offer is silent on costs and is accepted, the court must add an appropriate amount for costs to the judgment.

Allowing lump-sum offers advances Rule 68's settlement purpose. Defendants may be reluctant to make offers if they cannot fix their total exposure and instead remain liable for an attorney-fee amount later determined by the court.

A plaintiff can reasonably evaluate a lump-sum offer by adding the known damages claim to the costs already accrued and comparing that total with the offer. Post-offer costs are not included in determining whether the ultimate judgment was more favorable, because they are expenses caused by continuing litigation after the offer.

Issue #2

Whether attorney's fees available to a prevailing civil-rights plaintiff under 42 U.S.C. § 1988 are "costs" subject to Rule 68's post-offer cost-shifting provision.

Holding

Yes. Because § 1988 expressly makes a reasonable attorney's fee part of the costs, a plaintiff who rejects a Rule 68 offer and later obtains a less favorable judgment cannot recover § 1988 attorney's fees incurred after the offer.

Reasoning

Rule 68 does not independently define "costs." Against the historical background in which some substantive statutes treated attorney's fees as costs and others did not, the Court inferred that Rule 68 incorporates all costs properly awardable under the substantive statute governing the action.

Section 1988 authorizes a prevailing party in a § 1983 action to receive a reasonable attorney's fee "as part of the costs." That statutory language brings otherwise awardable § 1988 fees within Rule 68's reference to costs.

This reading gives effect to both provisions: § 1988 identifies attorney's fees as an available component of costs, while Rule 68 shifts post-offer costs when an offeree rejects an offer and later does no better at trial. Nothing in § 1988 clearly exempts civil-rights cases from Rule 68.

The Court rejected the view that this rule undermines civil-rights enforcement. Section 1988 encourages meritorious suits, while Rule 68 encourages settlement; those goals are compatible. Rule 68 requires plaintiffs and counsel to reassess litigation after a meaningful offer, but it does not bar suit or deprive plaintiffs of pre-offer fees.

The result also accords with § 1988's requirement that fees be reasonable in light of the success obtained. Here, Chesny's post-offer legal services cost roughly $139,692 but produced a judgment $8,000 below the settlement offer, so those services yielded no additional monetary benefit to him.

Concurrences

Justice Powell

Reasoning

Justice Powell had previously taken the view that a Rule 68 offer should separately identify substantive relief and accrued costs, including a reasonable attorney's fee, with the ultimate fee amount to be fixed by the court if the offer were accepted. He continued to regard separate identification as the better practice.

He nonetheless joined the Court because a clear and authoritative interpretation of Rule 68 was important. In his view, the decision promotes the Rule's central function of facilitating early resolution of marginal or speculative suits.

Justice Rehnquist

Reasoning

Justice Rehnquist acknowledged that he had previously concluded that Rule 68's term "costs" did not include attorney's fees. After reconsidering the question, he concluded that his earlier position was incorrect and joined the Court's opinion.

Dissents

Justice Brennan

Reasoning

Justice Brennan argued that "costs" in the Federal Rules should carry its traditional, uniform meaning: the taxable items listed in 28 U.S.C. § 1920, such as filing fees, transcript expenses, and witness fees. Attorney's fees, he maintained, are not ordinary taxable costs merely because a particular substantive statute describes them as part of costs.

In his view, the majority's statute-by-statute approach creates an irrational patchwork. Rule 68 would shift post-offer fees under statutes that call fees "part of costs," but not under statutes that authorize "costs and attorney's fees" as separate items, even where the statutes serve the same purposes and regulate similar conduct.

The structure of the Rules supported a uniform, narrower definition. Rule 54(d) allows costs to be routinely taxed by a clerk on one day's notice, whereas attorney-fee awards commonly require substantial judicial factfinding. Moreover, when the Rules intend to authorize attorney's fees, they generally mention fees expressly rather than relying on the word "costs."

Justice Brennan further reasoned that § 1988 permits only reasonable fees and gives district courts discretion to assess reasonableness in light of the entire litigation. Rule 68, by contrast, operates mechanically: it automatically eliminates all post-offer fees whenever the ultimate judgment is not more favorable than the offer, even if the plaintiff's continued litigation was reasonable and produced important public or nonmonetary relief.

He rejected the majority's description of Rule 68 as neutral. The Rule gives only defendants the power to make cost-shifting offers, permits early offers before meaningful discovery, and can pressure civil-rights plaintiffs to accept inadequate settlements before they can evaluate the strength or value of their claims.

Finally, Justice Brennan maintained that interpreting Rule 68 to cut off otherwise reasonable § 1988 fees improperly abridges a substantive statutory remedy, contrary to the Rules Enabling Act. Because Congress and the Judicial Conference were actively considering whether and how to amend Rule 68 to address attorney's fees, he believed the Court should not impose that result through interpretation. Justice Marshall and Justice Blackmun joined his dissent.